Time to recast the template for Auto Expo

The prominent feature of this year’s Auto Expo, apart from the low levels of participation, was the overwhelming China factor.

This was not only in terms of the manufacturers present from the country but also the bizarre spectacle of people wandering around the venue in masks. Clearly, there was tremendous paranoia about the coronavirus, which has displayed a vulnerable side to an otherwise invincible China.

Its impact is being felt in India, too, and, more specifically, at the Auto Expo grounds in Greater Noida. While the likes of SAIC Motor Corp, Great Wall Motors and FAW were present, their Chinese representatives did not fly down to India for obvious reasons.

Yet, the Society of Indian Automobile Manufacturers (SIAM), the principal organisers of the Auto Expo, was leaving nothing to chance and assured visitors that every safety precaution was being taken. The masks were part of this effort and, in a funny sense, were a welcome distraction from what was a lacklustre show.

Of course, the coronavirus is no laughing matter and the death toll rising by the day in China causes great concern. The Auto Expo organisers were quite right in taking pre-emptive measures, especially with a sizeable Chinese presence, but this still did not take away the fact that the entire event was nothing short of a damp squib.

Sure, the crowds will start coming in once the gates are thrown open to the public but there is really little to look forward to this time round. Many of the big ticket names are missing in cars, and the scenario is far more dismal in two-wheelers.

Their absence is especially significant considering India is the largest producer of bikes and scooters in the world with an annual output exceeding 21 million units. Be it Hero, TVS, Bajaj, Honda, Yamaha or Royal Enfield, none was present at the Expo. Suzuki Motorcycles was the exception to the rule, as also Piaggio, with its Vespa and Aprilia, but this did not make up for the void left behind by the other big brands.

In the passenger car space, the big four — Maruti Suzuki, Hyundai, Tata Motors and Mahindra & Mahindra — had turned up in addition to a formidable challenger in the form of Kia Motors. Mercedes-Benz, Renault and Skoda/Volkswagen were the faces from Europe and, of course, there were the Chinese brands who are bound to create a disruption during the course of this decade.

It is not entirely surprising why many companies chose to stay away from the event this time. It is no secret that the auto industry is going through a terrible slowdown, which has seen huge job losses across the entire supply chain right, from plants to dealerships.

Beyond this, manufacturers have had their hands full with the Bharat Stage-VI (BS-VI) emissions challenge, which has involved pretty huge investments. This naturally means that their new offerings are going to be expensive, which is going to do little from the viewpoint of boosting customer sentiment.

In this background, the fact that they chose to give the Expo a skip is understandable, especially when participation costs are pretty steep, running into many, many crores of rupees. Beyond the hall space, there are a host of other overheads on logistics costs, fees for models who pose by the cars and so on.

Planning for such events is not the easiest of tasks and kudos to those who still decided to throw their hats into the ring. By the time the curtains come down on the event, they will be in a better position to gauge if the exercise was worth it in terms of public connect and product recall.

Will government step in?

Some of them would also be justified in asking if the government has also done its bit in reciprocating their efforts. If one has to go by the recent Budget, there is really nothing in it for the auto industry. Likewise, it is not as if changes in the income-tax rules will give a fillip to buying. The slowdown is here to stay even while manufacturers are hoping that the turnaround will happen after October.

A section of observers believe that a reduction in GST levels from 28 to 18 per cent would have helped the cause of the industry but it is evident that revenue considerations are playing on the government’s mind. In reality, a cut in GST may just do the trick in drawing customers back to showrooms, especially in a price-sensitive market like India. The volumes will perhaps make up for the lower duty in the process.

On the two-wheeler side, companies have had to face severe headwinds in the form of levies on insurance and safety fitments like ABS, which have only added to the price tag of the product. Whether the government will consider rolling these back as part of an effort to revive growth in the industry is the million-dollar question.

In the commercial vehicle space, there are fears that this calendar year could see volumes in the 10-50 tonne space crash to 150,000 units, which will be a 60 per cent fall from 2018. If this were to happen, it would have catastrophic fallouts in terms of fleet owners shutting job and job losses piling up by the day. The commercial vehicle industry is a key barometer of economic prosperity and, if the worst does happen, it will be tough going for the economy.

All this puts into perspective the relevance of events like the Auto Expo. There is absolutely no question that they help draw the crowds and spread the word on new products rapidly through social media. Yet, if this year’s turnout is any indication, the time has come for serious introspection on what could be the state of affairs in 2022, when the Expo will be held again.

Will the industry bounce back strongly enough to ensure greater participation two years down the line? It is tough to say considering that there will be tighter norms coming into place on emissions and safety. These, in turn, will impose more a greater cost burden on manufacturers. While coping with these challenges, will they still be inclined to cough up big bucks and participate in the Expo?

These are not easy questions to answer right now but it is quite evident that, across the world, interest in auto shows is on the wane. The biggest of them all, at Frankfurt, was quite lacklustre at its recent outing some months ago.

What does this indicate? Manufacturers are clearly weighing the pros and cons of such events more carefully since they have a whole lot of other priorities that need their attention. Electrification, for instance, is the new frontier which calls for huge investments and puts on context why companies are sewing up alliances and taking on the challenge jointly.

Across the world, especially in Europe, governments are tightening emission laws, which means that manufacturers need to be constantly vigilant about ad hoc legislations that may just crop up from time to time. What makes it even more difficult for them is that they need to cope with different diktats across the world, especially on emissions.

Regulations will be the dominant theme of this decade and the global automotive industry will have its wok cut out, grappling with these challenges. India is as keen on making a statement with clean air but will have to tread carefully and not make grandiose proclamations on mass electrification, especially when the infrastructure is still not in place.

The industry and government just need to work a lot more closely together. There is really little achieved when policymakers start reading out the new rules of the game to manufacturers, as what happened not so long ago when an idea was floated to convert sub 150cc bikes into electric by 2025.

Fortunately, it was given a quiet burial but it is these abrupt announcements that can throw plans out of gear.

Auto expos will need to keep pace with these changes and this explains why the Consumer Electronics Show (CES), held annually in Las Vegas, has become such a huge draw for automakers. It fits in with today’s changing times, where the name of the game is mobility disruption in terms of connectivity, etc. It is perhaps important for the organisers of the Delhi Auto Expo to think about the future and recast the template more appropriately to fit in with reality. Perhaps alternative venues like Bengaluru can be considered since it is the country’s top destination for start-ups, which are emerging as an integral part of the modern automotive ecosystem.

Nostalgic memories

For those who are nostalgic, memories of the 1998 Expo may come flooding back — when the Tata Indica was the showstopper. This was also the time Hyundai made its intent known with the Santro. A decade later, it was the Nano which hogged the headlines, at the 2008 Expo. The interim years had their moments, like Sachin Tendulkar at the Fiat pavilion…yes, those were heady times.

A lot of water has flowed under the bridge since then. A country which was taking baby steps in its automotive script post-liberalisation is now on its way to becoming the third largest producer of cars worldwide.

Some big names have dropped out of the arena while new ones have come in. The Auto Expo needs to reflect this reality and move with the times. Perhaps this year’s event will be a wakeup call to prepare anew for 2022.

COMMENT NOW